Legal implications of adopting Building Information Modelling (BIM) in EU public procurement

Tuesday 27 September 2022

Mohammadyasha Sakhavi
Copenhagen

Introduction

Contractors on construction projects possess valuable knowledge and experience that is useful in developing the design of the projects and their overall success. To take full advantage of this knowledge and experience, early contractor involvement in the design is necessary. Involving contractors early in the design phase can avoid subsequent wasted time, cost and effort that is common in such projects. This is because a large proportion of construction problems are due to a poor understanding of the design and the impact of design decisions made prior to project delivery.^[1]

Building Information Modelling (BIM), as an information-sharing technology, facilitates the early involvement of contractors in the tendering process. However, as a BIM model contains information that is shared by its participants, its inclusion in a tendering process raises legal issues regarding ownership of the model and protection of confidential information.^[2] The open sharing of information in tendering processes through BIM increases the risk of disclosure of confidential information and even collusion, as the contracting authority and winner will have the opportunity to use an unselected provider’s information and ideas. This would be harmful to economic operators and discourage them from participating in competitive tendering. This article examines the ownership of the BIM model and the liability of contracting authorities in relation to information shared via the BIM platform during the tendering phase.

Building Information Modelling (BIM)

BIM as a collaborative system is described as using:

‘[…] advanced computer systems to build 3D models of infrastructure and hold large amounts of information about its design, operation and current condition. At the planning stage it enables designers, owners and users to work together to produce the best possible designs and to test them in the computer before they are built. In construction it enables engineers, contractors and suppliers to integrate complex components cutting out waste and reducing the risk of errors.^[3]

BIMs are deployed in four levels from Level 0 to Level 3, which are defined based on their collaboration level. BIM Level 0 is the simplest type of BIM, which works by using hand-written or electronically generated paper documents. Level 1 works by creating 2D and 3D models and sharing information electronically without the use of a detailed database. In Level 2, each project participant develops their own 3D models and information is shared using a common file format. Level 3 and beyond is a completely open process based on a single 3D model where all participants share their model development information.^[4] Level 3 eliminates the possibility of conflicting information and ensures consistency.^[5] BIM Level 3 was introduced to encourage open and collaborative work between project participants by allowing straightforward sharing of data. Some important functions of BIM are cost estimation, time evaluation, energy efficiency analysis, or utilisation optimisation.^[6]

BIM ownership

When a design is based on a 2D model there is no uncertainty about ownership of the model and its elements, since the ownership of a drawing is asserted on each of its pages.^[7] However, IP ownership becomes an issue in 3D and 4D models when project participants contribute their experience and information in the development of a single BIM model.

As BIM Level 3 requires the creation of transparent information sharing and a highly collaborative environment, it is the best solution for project delivery systems such as integrated project deliveries where early contractor involvement is required. However, the inclusion of BIM in the tendering process raises the legal issue of ownership of the BIM model. Since the BIM model is developed collaboratively by its participants, its ownership is uncertain. To address this issue, it is necessary to determine whether the elements of the model are distinguishable.^[8] This distinction will be more difficult where multiple people have the possibility to change elements of the model.^[9]

Applicable IP law

BIM models created in the tendering process prior to the award of the contract will not usually be registered, and therefore cannot be protected by Design Law, as Article 10 of the EU Design Directive,^[10] conditions protection of design on registration. However, unregistered designs can be covered by copyright under the concept of artistic work,^[11] although EU Member States differ in how national copyright law protects unregistered designs. For instance, the German Act on Copyright and Related Rights (Urheberrechtsgesetz – UrhG)^[12] in section 2.4, the French Intellectual Property Code (Code de la propriété intellectuelle) in section L112-2.7, and the Danish Consolidated Act on Copyright 2014, Consolidated Act No 1144 of 23 October 2014 (Bekendtgørelse af lov om ophavsret (LBK nr 1144 af 23/10/2014)) in section 1.1, all list works of architecture under protectable copyright law.

Joint ownership of the BIM model

Determining the ownership of IP rights over the BIM model and its elements is necessary to determine the lawful exercise of ownership. Generally, an owner of a model is granted exclusive right regarding the use of IP and consequently to copy and disclose it as it wishes.^[13] In BIM Level 3, however, the authors of the model are regularly indistinguishable. However, if the contracting authorities are to be granted ownership of a BIM model jointly with a tenderer or winner, exercising their right by disclosing it to a third party would be contrary to the interest of the other joint owner. Therefore, the French, German and Danish legislatures grant joint ownership of jointly developed BIM models and regulate in their copyright laws the right of the owners in exercising ownership rights.

In this regard, the French Intellectual Property Code section L113-3^[14] provides:

‘The collaborative work is the common property of the co-authors. The co-authors must exercise their rights by mutual agreement. In the event of disagreement, it is for the civil jurisdiction to rule.’

The German Act on Copyright and Related Rights, section 8.1^[15] also provides for joint ownership if the individual shares of each author in the work are not separable. Section 8.2^[16] further states that the right to use the work and its modification is only possible with the consent of the co-authors. The Danish Consolidated Act on Copyright 2014, in section 6^[17] also grants joint ownership where individual contributions are not separable as independent works, with all joint owners being entitled to bring an infringement action. Therefore, exercising joint ownership rights will usually require an agreement between the owners or the consent of the other joint owner. Arbitrary exercise of ownership rights would raise the issue of infringement of IP rights and consequently lead to civil liability claims.

In conclusion, it can be stated that a BIM model developed in a tendering process by contracting authorities, architects and tenderers cannot be the sole property of the contracting authority as far as indistinguishable elements are concerned. This means that the model is jointly owned and the exercise of ownership rights by any of the parties without the consent or agreement of the other owners is an infringement of copyright and gives rise to civil liability. Therefore, the contracting authorities do not have the right to disclose the model to the other tenderers in exercise of their ownership right without the consent of the tenderer who co-owns the model.

Confidential information

The importance of confidentiality in tendering is stated in Article 21.1 of EU Public Procurement Directive 2014/24 section 21.1.^[18] However, there is no clear and unified definition of confidential information in the EU.

In this context, it is worth noting that Article 39 of the TRIPS^[19] Agreement refers to ‘commercially sensitive information’ and recognises protection against the disclosure of such information if it:

(1) is secret in the sense that it is not [...] generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

(2) has commercial value because it is secret; and

(3) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.^[20]

In the Postpank case, the European General Court described the notion of business secrets as follows: ‘“Business secrets are information of which not only disclosure to the public but also mere transmission to a person other than the one that provided the information may seriously harm the latter’s interests.’^[21] German legislature in the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen) takes a broad approach towards subjects of confidential information. Article 134.3^[22] of the Act provides that contracting authorities are free of any obligation of disclosure where such disclosure relates to confidential information and would therefore ‘harm legitimate commercial interests of undertakings’. Additionally, section 89(c)(3)^[23] gives courts broad discretion to reject a disclosure request of confidential information if there are ‘important reasons’ to keep that information confidential. The German legislature does not limit the confidential information to the conditions recognised in Article 39 of the TRIPS Agreement, nor to cases where the consequence would be serious harm as required by the General Court in the Postpank case. Instead, German law in its confidentiality evaluation relies on the (broad) concept of ‘important reasons’.

As confidential information is crucial for businesses, its protection is also crucial, especially when BIM is used as a method of sharing information in the tendering process. Since information is not treated as property in the EU, it is not protected under Intellectual Property laws.^[24] Copyright excludes contents and its protection covers only the author’s original treatment of data or its structure, not its content.^[25] In this regard, Article 3.2 of Directive 96/9/EC^[26] states: ‘The copyright protection of databases provided for by this Directive shall not extend to their contents and shall be without prejudice to any rights subsisting in those contents themselves.’

However, the protection of confidential information in public procurement can be provided under private law by way of an agreement or under public law as a general duty of confidentiality recognised in Directive 2014/24/EU for contracting authorities.

Confidentiality agreement

The protection of information that tenderers share, through the use of a BIM model, can be ensured through a confidentiality agreement. Where information is concerned that is critical to their business, tenderers will regularly enter into confidentiality agreements with the contracting authority before sharing such information. In such cases the contracting authority is prohibited from disclosing the information to third parties.

Duty of confidentiality

The general duty of confidentiality of the contracting authorities is recognised by the EU Public Procurement Directive 2014/24. Article 21.1 of the Directive provides:

‘Unless otherwise provided in this Directive or in the national law to which the contracting authority is subject, […] the contracting authority shall not disclose information forwarded to it by economic operators which they have designated as confidential, including, but not limited to, technical or trade secrets and the confidential aspects of tenders.’

The first part of the above article gives the EU Member States broad discretion to regulate their non-disclosure obligation in public procurements. This, besides the fact that there is no uniform definition of confidential information in the laws of the EU Member States, has led to different practices of information protection in the EU Member States. Although most EU Member States provide a minimum level of protection for information shared during the tendering process, some states take a more liberal approach towards such information. In Finland, for example, tender documents are made available to the public after the confidential information has been removed. Confidential information may also be disclosed if this information has an impact on the evaluation of a tender, as it is considered that the principle of transparency and public interest outweighs considerations of confidentiality.^[27]

Such a liberal approach towards information disclosed in the context of public procurement can potentially harm competition. Too much openness of information provided by tenderers creates the fear of losing advantages gained from the information and, consequently, distorts competition, while according to the European Court of Justice (ECJ) in Impresa Pizzarotti & C. SpA v Comune di Bari,^[28] protecting competition is the ultimate purpose of the EU Directive. The fear of sharing information also jeopardises the main purpose of using BIM in the tendering process, which is to benefit from contractors’ and suppliers’ design information and to minimise future design defects due to the lack of information.

Business information is critical to the success of businesses, so disclosing confidential information or even a too extensive disclosure of non-confidential information would make the businesses uncomfortable and consequently harms competition.^[29] The ECJ in C-450/06 Varec^[30] highlighted the importance of maintaining fair competition in public procurement as an important public interest and concluded that:

‘[i]n order to attain that objective it is important that the contracting authorities do not release information relating to contract award procedures which could be used to distort competition, whether in an on-going procurement procedure or in subsequent procedures.’^[31]

Moreover, considering the deterrent effect of the information disclosure policy in the tendering procedure and its impact on competition, the ECJ stated:

‘Those operators must be able to communicate any relevant information to the contracting authorities in the procurement process, without fear that the authorities will communicate to third parties items of information whose disclosure could be damaging to them.’^[32]

The nature of BIM as an information-sharing platform in combination with a duty to protect confidential information exposes contracting authorities to a greater risk of liability. The use of BIM in the tendering process implies a higher risk of information leakage and/or misuse of information and, consequently, a greater responsibility for contracting authorities to ensure a safe environment and fair competition. Otherwise, contracting authorities would expose themselves to possible claims for breach of confidentiality obligations and failure to ensure a secure tendering process.

Obligation of disclosure

The duty of confidentiality conflicts with the general duty of disclosure arising from the transparency principle expressed in Article 18.1 of the EU Procurement Directive 2014/24. It has been argued that, since the principle of transparency is an important measure in the fight against corruption, this principle (together with the principle of democracy) outweigh the duty of confidentiality, and that therefore tender documents should be treated as public information and be available to the general public.^[33] The Finnish Act on the Openness of Government Activities (laki viranomaisten toiminnan julkisuudesta 621/1999) has taken this approach and given the fellow tenderers the right to comprehensive access to information, including even confidential information and trade secrets if such information is assessed as part of the tender evaluation.^[34]

However, in the Varec case^[35], the ECJ held that the effectiveness of the contracting authorities’ in providing fair competition in the public procurement process would be severely undermined if ‘in an appeal against a decision taken by a contracting authority in relation to a contract award procedure, all of the information concerning that award procedure had to be made unreservedly available to the appellant, or even to others such as the interveners.’

The ECJ further held that ‘[s]uch an opportunity could even encourage economic operators to bring an appeal solely for the purpose of gaining access to their competitors’ business secrets.’

Additionally, the ECJ has repeatedly emphasised that one of the fundamental purposes of EU Public Procurement rules is to ensure open and undistorted competition in the Member States, as well as to develop effective competition in the field of public contracts.^[36]

Some EU Member States, such as Germany, France, and Denmark, place more emphasis on fair and effective competition than on the obligation of disclosure, as they believe fair competition is necessary to ensure the effectiveness of the tendering process. In this regard, the French Public Order Code 2020 (Code de la commande publique (CCP) 2020) in section L. 2132-1,^[37] the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen) in section 134(3),^[38] and the Danish Public Procurement Act (Udbudsloven) in section129 (5),^[39] rule out the disclosure obligation of the contracting authorities in tendering processes if doing so would harm fair and effective competition in public procurements.

In this regard, a judge in the UK Appeal Court case Veolia v Nottinghamshire CC^[40] expressed concern about the detrimental effect of disclosure of confidential information on public interest and its negative effect on competition by stating:

‘[…] it is plain that there is a strong public interest in the maintenance of valuable commercial confidential information... If the penalty for contracting with public authorities were to be the potential loss of such confidential information, then public authorities and the public interest would be the losers, and the result would be potentially anti-competitive.’

Therefore, the protection of confidential information is not only a matter of private law in order to protect interests of undertakings, but also a matter of public interest as it is necessary to ensure undistorted competition in the tendering process.^[41] Recognising fair competition as a matter of public interest, the ECJ states in the Varec case:^[42] ‘the maintenance of fair competition in the context of contract award procedures is an important public interest.’

Although the principle of transparency in tendering processes counters corruption, effective competition is the main element of success in public projects. While the use of BIM in tendering processes contributes to transparency, the aspect of open exchange of information carries a greater risk of breach of confidentiality obligations by contracting authorities. This is because contracting authorities are responsible for protecting confidential information. Providing a secure environment for information exchange while using an open platform for information exchange demands higher standards. The general duty of contracting authorities to ensure effective competition would compel them to provide for such standards. Therefore, failure to provide a secure environment for information exchange in a BIM-based tendering process would be considered a breach of the contracting authorities’ obligation to ensure effective competition.

As can be seen, the duty of confidentiality and the duty of transparency present the contracting authorities with a dilemma. This problem must be solved by creating more certainty in the application of the principles of transparency and confidentiality in the EU Member States through explicit rules on transparency and confidentiality in public procurement at the EU level. As the ECJ stated in the Varec case:^[43] ‘that right of access must be balanced against the right of other economic operators to the protection of their confidential information and their business secrets.’

Conclusion

The developers of a BIM model in a tendering process will be the joint owners of the model and the exercise of their ownership right is governed by the copyright law of the relevant EU Member State. Since the exercise of its ownership right by each owner can potentially conflict with the interests of another owner, such exercise would generally only be permitted with the consent of the other owner(s). Therefore, the contracting authorities would not have the right to disclose the BIM model to third parties without the prior consent of the tenderer with whom they developed the BIM model.

As for the shared information in a BIM model, the protection of the information cannot be covered by copyright law, since copyright does not protect the content of databases.^[44] In this situation, the common practice of entering into confidentiality agreements between a tenderer and the contracting authority is the most viable solution.

Where there is no such confidentially agreement, Article 21.1 of the EU Public Procurement Directive 2014/24 imposes a duty of confidentiality on principals, mainly on the grounds of effective competition and ultimately to protect public interest. However, this provision gives a broad discretion to the EU Member States to regulate the duty of confidentiality of the contracting authorities in tendering processes. In this respect, some states, such as Finland, favour transparency over confidentiality where the confidential information has an impact on the evaluation of a tender. Other states, such as France, Germany and Denmark place a greater emphasis on confidentiality to promote fair and effective competition. The ECJ has taken the same approach, proclaiming effective competition as the ultimate purpose of  Directive 2014/24 and prohibiting contracting authorities from releasing any (confidential) information shared by tenderers in their tender which could distort competition. Therefore, the acceptance of BIM in a tendering process of such states where the confidentiality obligation of contracting authorities has a higher priority would expose contracting authorities to greater liability. However, in states such as Finland, where the principles of openness and transparency outweigh confidentiality, the implementation of BIM in the tendering process would have little impact on the general liability of contracting authorities with regard to shared information.